Correlation Between BTG Pactual and Hotis Othon

Can any of the company-specific risk be diversified away by investing in both BTG Pactual and Hotis Othon at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining BTG Pactual and Hotis Othon into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between BTG Pactual Logstica and Hotis Othon SA, you can compare the effects of market volatilities on BTG Pactual and Hotis Othon and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in BTG Pactual with a short position of Hotis Othon. Check out your portfolio center. Please also check ongoing floating volatility patterns of BTG Pactual and Hotis Othon.

Diversification Opportunities for BTG Pactual and Hotis Othon

-0.16

Correlation Coefficient

BTG Pactual  Hotis Othon

Good diversification

The 3 months correlation between BTG and Hotis is -0.16. Overlapping area represents the amount of risk that can be diversified away by holding BTG Pactual Logstica and Hotis Othon SA in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Hotis Othon SA and BTG Pactual is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on BTG Pactual Logstica are associated (or correlated) with Hotis Othon. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Hotis Othon SA has no effect on the direction of BTG Pactual i.e., BTG Pactual and Hotis Othon go up and down completely randomly.

Pair Corralation between BTG Pactual and Hotis Othon

Assuming the 90 days trading horizon BTG Pactual Logstica is expected to generate 1.33 times more return on investment than Hotis Othon. However, BTG Pactual is 1.33 times more volatile than Hotis Othon SA. It trades about 0.29 of its potential returns per unit of risk. Hotis Othon SA is currently generating about -0.01 per unit of risk. If you would invest  8,875  in BTG Pactual Logstica on October 21, 2024 and sell it today you would earn a total of  665.00  from holding BTG Pactual Logstica or generate 7.49% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	88.89%
Values	Daily Returns

BTG Pactual Logstica  vs.  Hotis Othon SA

BTG Pactual Logstica

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days BTG Pactual Logstica has generated negative risk-adjusted returns adding no value to fund investors. Despite somewhat strong essential indicators, BTG Pactual is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Hotis Othon SA

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Hotis Othon SA are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable basic indicators, Hotis Othon is not utilizing all of its potentials. The newest stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with BTG Pactual and Hotis Othon

The main advantage of trading using opposite BTG Pactual and Hotis Othon positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if BTG Pactual position performs unexpectedly, Hotis Othon can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Hotis Othon will offset losses from the drop in Hotis Othon's long position.

The idea behind BTG Pactual Logstica and Hotis Othon SA pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Equity Search module to search for actively traded equities including funds and ETFs from over 30 global markets.